Chevron will spend around A$40mn ($29.2mn) on carbon credits to make up for a shortfall in the volume of CO2 it was able to abate through a carbon capture and storage (CCS) facility at its 15.6mn t/yr Gorgon LNG venture on Barrow island offshore Western Australia (WA).
Chevron will fulfil its regulatory obligations through the acquisition of 5.23mn of carbon offsets, it said yesterday. The CCS plant was expected to hold 4mn t/yr of CO2 equivalent (CO2e), but the update from Chevron implies that it is injecting around 2.5mn t/yr of CO2e or 37.5pc below the expected annualised rate. Chevron said it has injected 5.5mn t of CO2 into its CCS facility since it started in August 2019.
The Gorgon CCS facility started more than three years after first gas was shipped from train one of Gorgon's three-train project in March 2016. The start-up of the CCS plant at Gorgon endured several delays as Chevron missed start-up targets for 2017 and 2018.
"We take our regulatory obligations seriously. The package we have announced will see us make good on our commitment to offset the injection shortfall, and ensures we meet the expectations of the regulator," Chevron Australia's managing director Mark Hatfield said.
The purchase of carbon offsets to make up for the CCS shortfall follows an announcement in July that Chevron is working with the WA state regulator on the implications of the CCS shortfall.
The Gorgon CCS plant abates emissions only from the extraction of gas in the Gorgon and Jansz-Io fields that provide feedstock for the Gorgon LNG plant, which is the only LNG plant in Australia to have a CCS facility as it was a condition of WA state approval being granted as Barrow island is a nature reserve. Most of the carbon from upstream activity comes from the Gorgon field, which has a CO2 content of around 14pc, whereas the Jansz-Io field has less than 1pc of CO2e.
None of the CO2e emitted from the Gorgon LNG liquefaction process is abated and the majority of emissions from Gorgon consist of scope three, which are created when the gas is burnt by consumers.
Australia is the world's largest LNG exporter and its LNG sector emitted 38mn t of CO2e in 2019 or 7.1pc of Australia's total emissions, which the Australian government's Department of Industry, Science, Energy and Resources sees rising to 42mn t in 2030, or 9.5pc of projected national emissions.
Other Australian LNG ventures are looking at adding CCS facilities to their respective LNG plants. Australian independent Santos last week gave the go-ahead for the 1.7mn t/yr Moomba CCS plant in the onshore Cooper basin in South Australia, with a start-up expected in 2024. The Moomba CCS plant may abate some of the emissions from the 3.7mn t/yr Darwin LNG plant operated by Santos.
Three of the partners in the 16.3mn t/yr North West Shelf (NWS) LNG venture formed a consortium last week to progress feasibility studies for a CCS project near Karratha in WA, where the downstream NWS LNG facilities are located.
The Australian conservative coalition government said this week it will establish a A$500mn ($368mn) fund for low emissions technology such as CCS as Canberra wants to ensure that it supports the country's LNG sector and provide incentives to the upstream sector to produce hydrogen from natural gas, including for CCS facilities.
